defined-contribution pension plan

Defined Contribution Plan

A retirement plan in which the employee and/or employer contribute a set dollar amount each month. The benefits of a defined contribution plan are not set, and depend upon how well the contributions are invested before the pensioner starts to make withdrawals. The disadvantage of a defined contribution plan is the possibility that the investments will not perform as well as expected, giving the pensioner a less secure retirement. The advantage is that the pensioner, while still making contributions, has the ability to determine how the contributions are invested, at least to a certain extent. See also: 401(k).

defined-contribution pension plan

A pension plan in which an employer's periodic payments into the plan, rather than eventual retirement benefits to employees, are specified. For example, a defined-contribution pension plan may require an employer to contribute 5% of its employees' gross pay into a fund with contributions earmarked for each employee upon retirement.

Replace the current annual tax-deferred saving limits for defined-contribution pension plan participants and RRSP savers with more generous regimes: either index unused contribution room for inflation or, more farsightedly, establish an inflation-indexed lifetime tax-deferred savings limit that will permit all savers to achieve pension wealth equal to that of participants in relatively comprehensive defined-benefit plans.

The Roth 401(k) is a feature that can be added to a new or existing company-sponsored defined-contribution pension plan, including traditional 401(k)s, safe-harbor 401(k)s, and 403(b) tax-sheltered annuities.

The award adopts the new enhanced defined-contribution pension plan for new employees and provides current employees the choice--the same as for some other work groups and management--to move into the same enhanced defined-contribution plan or remain in their existing defined-benefit plan.

The award adopts the new enhanced defined-contribution pension plan for new employees and provides current employees the choice -- the same as for some other work groups and management -- to move into the same enhanced defined-contribution plan or remain in their existing defined-benefit plan.

Creating personal savings accounts or private accounts within the Social Security system would change it from a pay-as-you-go social insurance program to a hybrid with a defined-contribution pension plan component.

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